Australia is one of the biggest highly developed countries in the world. It is the 10th richest country with high per capita income, according to the data gathered for 2019. It also has a higher employment rate compared to other nations worldwide.
Franchising opportunities in Australia are also among the best globally. Based on the data gathered by IBISWorld, franchised businesses managed to employ as many as 594,500 individuals in 2018 and received an estimated $181.8 billion in combined revenue. Because of this, plenty of business-savvy individuals are interested in franchising an existing brand in the country.
If you want to look for a good franchise opportunity in Australia, here is the essential information you need to know to start your business venture.
What Is Franchising?
The franchising principle involves the ability of an enterprise to operate under an established brand, owned by another business owner. The franchisee has the authority to sell or offer an existing product or service for a particular period. In return, the franchisor will receive a fee from the franchisee. It could either be an initial payment or a continuous cost after the products’ turnover, or a mixture of both.
How To Determine If Franchising Is Good For You?
Like what you need to do when considering any business venture, you must always understand all your options before starting a franchised business. Once you sign up in a franchise agreement, you need to remember that the franchisor will be the one to have the last say on the name of the business, how you will promote the brand, and how to operate the business.
Franchising opportunities in Australia also need to follow certain laws, including the Franchising Code of Conduct and the Australian Consumer Law. Besides complying with these laws, you must still learn how to run the business properly to avoid losing your investment. You also need to understand how much you need to shell out for the upfront fees, starting and keeping the franchised business up and running, and any essential costs you need to pay for the business.
What Are The Different Franchise Models In Australia?
There are four common business models used when franchising business in Australia. It includes:
- Manufacturer-Retailer
This business model is more common among car dealership shops. The franchisor will let the retailer sell the products straight in the market. For example, a car manufacturer will allow a local car dealership company to sell their brand-new car models in their shop.
- Manufacturer-Wholesaler
This business model authorises a franchisee to have a licence to manufacture and distribute a product developed by the franchisor. It is the perfect model for soft drink businesses that can bottle an existing product.
- Wholesaler-Retailer
Under this business model, the franchisee/retailer will purchase the products from a wholesaler/franchisor. Then the former will be allowed to sell the items at retail prices. It is the usual business model used by hardware stores and automotive parts suppliers.
- Retailer-Retailer
Quick-service restaurants follow this type of business model. For this agreement, the franchisor offers its products or services to the public through several franchisees. All the franchisees will use a standard name and operation guidelines for uniformity.
Starting a franchise business has plenty of perks, especially if the brand already has a good reputation. But you still need to take a lot of considerations first before finalising your agreement with the franchisor to ensure that your investment will not go to waste.
